Buyout Giant Bets On Day Care

Kohlberg Kravis Roberts Acquiring Kindercare

October 05, 1996|By Casey Bukro, Tribune Staff Writer.

Hoping to build upon a growing number of women in professional careers seeking child-care services, one of the nation's largest acquisition firms said Friday it's buying KinderCare Learning Centers Inc.

"We believe there are opportunities for expanding the KinderCare network," said Ruth Pachman, a spokeswoman for New York-based Kohlberg Kravis Roberts & Co., which said it is buying the Montgomery, Ala.-based KinderCare for $597 million in cash and debt.

KinderCare's rapid growth is driven by the biggest baby boom since the 1950s and '60s, said the company, and by a trend in two-income families and working mothers.

"Women are entering the work force as lawyers, doctors and astronauts," said Thomas Johnson Jr., KinderCare's director of investor relations. "As a result, you have increasing demands for child care and quality services."

Johnson said that its 1,148 child-care centers, located in 38 states including Illinois, won't be affected by the acquisition.

"On any given day, we care for 125,000 children," he said.

The company said it has 83 centers in Illinois, 28 centers in Indiana, 10 in Iowa, 24 in Wisconsin, 35 in Michigan, 65 in Ohio and 48 in Missouri. It employs more than 23,000 people, with fiscal 1996 revenues of $541.3 million.

KinderCare specializes in providing daylong care, including transporting children to school and back. Their ages range from 6 weeks to 12 years.

"We have learning activities throughout the day," said Johnson. "One of the things that make us the best is we have computers for children in all the centers."

Founded in 1969, KinderCare grew rapidly until the mid-1980s, when former junk-bond king Michael Milken urged management to diversify by leveraging the company in 1989 with $500 million in debt. KinderCare defaulted in 1990, filed for Chapter 11 reorganization in 1992 and emerged in 1993.

KinderCare is controlled by affiliates of Trust Co. of the West, a Los Angeles money-management firm, which acquired a 52 percent stake through ownership of KinderCare's debt. The rest of the company's equity is publicly traded.